Users will not be charged due to PPI interchange because of the UPI transactions new rule, clarifies NPCI

From April 1, 2023, an interchange charge of up to 1.1 percent will be applied to any Unified Payments Interface (UPI) transaction of more than Rs 2,000 made using prepaid payment instruments (PPIs), such as online wallets or pre-loaded gift cards, etc. The interchange fee is usually applied to credit card transactions and is assessed to defray the costs of transaction acceptance, processing, and authorization.

Although the decision has been applauded by digital platforms like Cashfree Payments and Spice Money, consumers might have a number of questions about it. Here is a FAQ that addresses all of those questions:

Will customers be charged for UPI payments?

No. In a circular, NPCI made it clear that there are no fees for bank account to bank account-based UPI payments (also known as standard UPI payments) and that the interchange charges introduced are only applicable for PPI merchant transactions.

So, how will consumers benefit?

Customers will be able to use any bank account, a RuPay credit card, or a prepaid wallet on UPI-enabled applications as a result of this addition to UPI.

“The NPCI circular will make wallets more appealing to customers by opening up newer use cases of payments. It will eliminate the need for customers to carry multiple cards, thereby reducing fraud and theft due to the exposure of card numbers,” said Akash Sinha, Co-founder & CEO at Cashfree Payments.

How will merchants benefit?

For instance, at point of sale (PoS), many retailers take customer payments using wallets. Interoperability will make collection much simpler for them because it will enable businesses to take wallet payments from customers using any wallet.

“Further, it will eliminate the need for specific integrations with a particular wallet to accept payments on a website since customers can also pay via UPI or card infrastructure. This will increase the payment alternatives for customers. The interoperability of wallets with UPI will catalyse the progress of digital payments, enhancing the customer experience,” Sinha told

Ashwin Chawwla, CEO & Founder at Escrowpay, echoed similar sentiments when he stated that this decision is anticipated to generate much-needed revenue for payment service providers, who have been battling to maintain profitability due to the low transaction fees on UPI transactions.

“The increased charges on high-value UPI transactions are also expected to encourage merchants to adopt other payment modes, such as credit and debit cards, which have higher transaction fees. This will diversify the payments ecosystem and reduce the dependence on UPI for all transactions. With the introduction of a charge on high-value transactions, merchants are likely to adopt UPI for all transactions, which will further increase the adoption of digital payments,” Chawwla told


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